29 Sept 2025
This year presents significant risks for Iran, encompassing a struggling domestic economy, a looming pension fund crisis, and complex foreign policy challenges. The nation faces severe pressure from oil sanctions and potential geopolitical escalations, necessitating urgent, decisive actions.
Many individuals aspire to be productive, work, and engage in value-creating activities, rather than simply moving their capital abroad. Unfortunately, businesses face severe difficulties, frequently opening with significant decor only to close within three months, leading to deep disappointment.
Iran's budget faces challenges, with tax documents undergoing review. The nation's reliance on oil revenue remains extremely high, making this year particularly risky as international actors, specifically referencing Mr. Trump, aim to prevent Iran from selling oil effectively. While Iran developed methods to sell oil under past sanctions, these routes are now also being targeted for closure. If the projected oil revenue for the budget is not realized, it will lead to significant budget overruns and adverse consequences.
Pension funds represent a massive ticking time bomb due to past mismanagement and demographic shifts. Historically, a young population contributed heavily while fewer retirees drew benefits; however, the government largely spent these funds instead of investing them. Currently, Iran's population is aging, and the support ratio for pension recipients is critically low, forcing a significant portion of government revenue to cover these funds. Without a substantial and innovative solution, this issue will evolve into one of Iran's primary crises in the near future.
Persistent discussions about striking critical infrastructure pose a significant risk with far-reaching side effects. Reports from international agencies indicate Iran has increased uranium enrichment and production, raising concerns about nuclear escalation. These developments, coupled with a weakened negotiating position in the region, suggest Iran's current approach may be aimed at securing better negotiation terms. Decisive actions are imperative this year, as the window for effective negotiation might diminish in the subsequent year.
The adoption of FATF legislation appears unlikely, despite ongoing discussions that aim to stabilize the dollar. Furthermore, the expiration of the Joint Comprehensive Plan of Action (JCPOA) is a critical event, potentially reactivating the snapback mechanism by European parties in consultation with the U.S. While some officials downplay its impact, similar past rhetoric about sanctions led to tangible negative effects on people's lives.
Under current conditions, the equilibrium price for the dollar against the Toman, considering liquidity, is projected at 105,000 Tomans. In a higher-risk scenario, should current challenges persist, this value could escalate to 126,000 Tomans. These projections do not account for potential further escalations, such as the activation of the snapback mechanism or a military conflict, which would significantly alter the economic outlook.
The pension funds, without a truly significant and extraordinary solution, will undoubtedly become one of Iran's major crises in the coming years.
| Challenge | CoreIssue | Outlook |
|---|---|---|
| Business Environment | Many individuals desire productivity and value creation, but domestic businesses struggle and close rapidly. | Leads to economic stagnation, unfulfilled potential, and widespread disappointment. |
| Oil Dependency & Budget | High reliance on oil revenues faces severe international sanctions and efforts to block sales routes. | High risk of significant budget shortfalls and adverse economic consequences if oil sales targets are not met. |
| Pension Funds Crisis | Aging population and historical mismanagement have depleted pension funds, requiring massive government subsidies. | A critical 'ticking time bomb' that will become a major national crisis without extraordinary solutions. |
| Nuclear & War Risks | Increased uranium enrichment and regional tensions heighten the threat of military confrontation and nuclearization. | High risk of infrastructure strikes and geopolitical escalation, weakening Iran's negotiation standing. |
| FATF & JCPOA Status | Unlikelihood of FATF adoption and the potential activation of the JCPOA snapback mechanism. | Exacerbates international isolation and economic pressure, with tangible negative impacts on citizens' lives. |
| Dollar Exchange Rate Volatility | Economic conditions and external risks lead to projected equilibrium and higher-risk dollar valuations. | Further economic instability and devaluation are possible, especially with additional external shocks. |
